This is the final article in IFA Magazine’s popular series looking at the detailed research which has been compiled by compliance specialist, Tony Catt, of TC Compliance Services, into Managed Portfolio Services. Here we highlight some of the conversations in our recent MPS webinar which discussed this analysis and considered how adviser businesses can support their due diligence process whilst ensuring that they are delivering the most suitable client outcomes when it comes to MPS selection.
There is a range of resources available to advisers and paraplanners to help with the due diligence process and Tony Catt’s MPS report is one of these. However, as Catt explains, when he initially looked at the reports and analysis available elsewhere, they covered a core of MPS providers but “they each had some which did not appear on the other reports”. He went on to explain that “none of them had as much detail as I wanted or breadth of providers. So, I thought that I would just have to do it myself.” His report looks at 65 different investment management services with the aim of helping advisers to do better quality business.
Whilst some firms will find that it suits their business and their clients to manage portfolios in house, more and more businesses are finding that by outsourcing the management of their clients’ portfolios to an external fund manager can bring significant benefits. How do you find out the full range of products and services which are available on the market? But how do you decide which services to use? What criteria do you consider?
It’s good to talk
These are just some of the challenges which adviser firms face when it comes to MPS. They are also some of the key factors behind Catt’s MPS Research Report and the expert discussion which took place on the MPS webinar held recently by IFA Magazine.
On Thursday 12 November, we were delighted to welcome over 100 advisers to join us in hearing from six experts in the field of Managed Portfolio Services. During the webinar, attendees benefitted from a practical and high level discussion amongst individuals whose knowledge, nsight and opinions will help IFAs to shape due diligence and selection criteria around MPS and discretionary managed portfolios.
Representatives from Asset Risk Consultants, Aberdeen Standard Capital, JM Finn, EQ Investors, TC Compliance Services and King & Shaxson came together to lift the bonnet on Catt’s MPS report and also to give their views on the range of MPS services currently available for IFAs and their clients and broader issues relating to how and why they are used.
Drilling down into the detail
The webinar discussion was ably chaired by Jonathan Gamble of Asset Risk Consultants. Gamble steered the experts’ around topics such as the impact of the Covid-19 pandemic, the active versus passive investment debate as well as questions around platform choice for MPS amongst many others. There was also wide discussion around the importance of Environment, Social and Governance (ESG) factors and responsible investing within an MPS structure. In particular, the role of specialist managers was considered to ensure that clients’ investment objectives could me accurately mapped to their all-important values around sustainability. Going forwards, this particular aspect will become of increasing importance as the panellists discussed and agreed, even though it now appears that new EU rules set to come into play in the UK next March might be shelved due to the Brexit situation. These rules, under the snappily named Sustainable Finance Disclosure Regulations (SFDR), would have meant extra disclosure requirements for advisers with regard to supporting evidence of clients’ objectives around sustainability being met within their investment portfolio. Whether these will be replaced with other similar rules in future cannot – of course – be ruled out.
There were many other practical issues discussed too, all relating to the areas which Catt’s analysis covers. One of these questions related to considerations as to how an MPS provider would sit alongside another used within an adviser’s business, reflecting the different needs of client segments. With the panel suggesting that most advisers will typically use between three and five MPS providers, needing to ensure that there is a clear process in place in order to identify which provider would be used in which instance and why.
Any discussion about MPS would not be complete without looking at cost, which is such an important aspect of any outsourced investment management service. An interesting discussion took place on this subject amongst the panellists with emphasis being placed on the need to deliver value for money for clients and to continue to drive greater efficiency whilst minimising the cost to the client.
Compliance is an investment
During the conversations it was mentioned that “compliance is a cost”. Rounding off the discussion, Catt argued this from a very different point of view. He felt strongly that “compliance is an investment” and articulated his argument powerfully. Stressing that having effective compliance systems in place, including systems, knowledge and information to assist in due diligence, means you can not only remain in business but also deliver increasingly an efficient and effective service for your clients.
For those who couldn’t make it on the day, many have already listened in to the recording of the webinar, which is still available for IFA Magazine readers to access here.